If stock market bears studied history, they’d realize that when both the GDP and US corporate profit cycles are accelerating, “expensive” stocks get more expensive.
Let’s dig into Q417 Earnings Season update data:
- S&P 500: 189 companies have reported aggregate year-over-year EPS growth of +11.3%;
- NASDAQ 100: 37 companies have reported aggregate year-over-year EPS growth of +29.4%;
- Sales growth trends may be the ultimate, pure-play growth accelerating indicator. Running at +8.1% Y/Y, aggregate sales growth for the S&P 500 has so far beat estimates by 1.3%.
Our call on U.S. #GrowthAccelerating remains firmly intact.
A Brief Note on Valuation...
We're seeing double digit earnings growth despite increasingly difficult comps. (Speaking of forward-looking comps, in Q1 2017 year-over-year EPS growth hit +14.6% but this won't be reported until April).
The market’s forward multiple is less than a turn above where it was a year ago. If you have listened to us for more than a day, you know we believe run-of-the-mill multiple math has some holes. At some point, expectations will create opportunity in overshooting. But we’re not making that call today.